Question

An investment banker deposited $50,000 in an account earning a nominal 6% per year compounded continuously. How much was in the account at the end of three years

Answer 1

Answer:

The amount in the account at the end of three years will be $59,861.

Step-by-step explanation:

The formula to compute the amount at the end of t years, compounded continuously is:

$A=P\times e^{t\times i}$

Here,

A = Amount at the end

P = Principal amount

i = interest rate

t = number of years.

It is provided that:

P = $50,000

i = 6%

t = 3 years

Compute the amount in the account at the end of three years as follows:

$A=P\times e^{t\times i}$

   $=50000\times e^{(3\times 0.06)}\\=50000\times 1.19722\\=59861$

Thus, the amount in the account at the end of three years will be $59,861.